Strong Fourth-Quarter Earnings Drove Philip Morris Stock

Fourth-quarter earnings

Philip Morris International (PM) posted its fourth-quarter earnings on February 7. For the quarter ended on December 31, the company posted adjusted EPS of $1.25 on revenues of $7.50 billion. Year-over-year, the company’s adjusted EPS declined by 5.3%, while its revenue fell by 9.6%.

Stock performance

Philip Morris outperformed analysts’ Q4 EPS estimate of $1.16 and revenue estimate of $7.39 billion. The company’s revenue was driven by a better-than-expected performance from heated tobacco units. Also, during its fourth-quarter earnings call, Philip Morris’s management expressed its satisfaction with customers’ response to its next generation of IQOS devices, IQOS 3 and IQOS MULTI, which were launched in mid-November globally.

The strong fourth-quarter earnings and customers’ positive response to Philip Morris’s recent launches appear to have increased investor confidence, leading to a rise in the company’s stock price. By the end of February 7, Philip Morris was trading at $76.73, which represents a rise of 1.6% from its previous day’s closing price.

Year-to-date performance

Last year was tough for Philip Morris. Its stock fell 36.8%. However, the company has started this year on a brighter note with 14.9% YTD gains. During the same period, peers Altria Group (MO) and British American Tobacco (BTI) have returned -1.4% and 11.3%, respectively. Also, the stock price of the Consumer Staples Select Sector SPDR ETF (XLP), which has 8.4% of its holdings in tobacco and cigarette companies, has increased by 5.4% YTD.

Series overview

In this series, we’ll look at Philip Morris’s fourth-quarter earnings and compare the results with analysts’ expectations. We’ll also cover the management’s guidance for 2019. Finally, we’ll end this series by looking at Philip Morris’s valuation multiple and analysts’ recommendations.